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if you are in a high income tax bracket you can also get decent returns after tax. you can also find muni bonds that are insured so even if they go bust there is an agency to keep paying.
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- Bonds are relatively safe compared to principle. That is because if you buy a stock under par, meaning you paid less than what it is worth at maturity, you will get your total investment back at maturity. The only special case is when the company or entitiy goes bankrupt. Then you say byebye, but that is relatively rare. So, with bonds there are 3 opportunities to get a return: yield, trading fluctuation of the principle value, and finally return by holding until maturation. But with all that said, bonds still tend to return less than stocks, if you know how to invest in stocks and their corresponding funds.
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